Does corporate investment efficiency affect corporate disclosure practices?

Noha Elberry, Khaled Hussainey

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    Purpose: We examine the impact of corporate investment efficiency on corporate voluntary disclosure for a sample of UK non-financial companies.

    Design: We use a sample of FTSE All Share firms for the period 2007-2014. Disclosure scores are collected from Corporate Financial Information Environment (CFIE). We follow Biddle et al. (2009) and Chen et al. (2011) in measuring corporate investment efficiency.

    We find that high level of performance-related disclosure is associated with high level of corporate investment efficiency, while high level of good news information is associated with low level of corporate investment efficiency. We also find evidence on a bidirectional relation between disclosure and corporate investment efficiency.

    Research implications: Our findings would be of importance to stakeholders and corporations. Stakeholders’ investment decisions could be facilitated by understanding the disclosures provided by their firms and how these firms’ performance is presented. Corporations become aware of the language, which must be used to signal their performance.

    Our paper adds to disclosure studies by introducing a new variable, corporate investment efficiency, as a determinant of corporate disclosure practice.
    Original languageEnglish
    Pages (from-to)309-327
    JournalJournal of Applied Accounting Research
    Issue number2
    Early online date13 Apr 2020
    Publication statusPublished - Jun 2020


    • Corporate investment efficiency
    • voluntary disclosure
    • disclosure tone
    • United Kingdom


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